UK Government Allocates Extra Funds for Brexit Preparedness

In the runup to Britain's long-anticipated exit from the European Union on October 31, the UK government has made a small amount of extra funding available to port regions for help in dealing with delays. The allocation, an additional $6 million for British localities with port and airport facilities, has drawn a mixed response, with some critics describing it as too little and too late to make a difference in the event of disruptions from a "no-deal" Brexit.

“Extra funding for the often hard pressed Local Authorities in port areas is welcome. But we should be realistic about the degree of significant change that’s possible between now and the end of October," said Tim Morris, chief executive of the UK Major Ports Group. "Support for Local Authorities in these areas also needs to be ongoing, to ensure we’re strategically developing the strength of the UK’s main global gateways for trade for the long term.” Morris pointed to a different (and potentially much larger) source of potential difficulty - the readiness of shippers to deal with a new customs regime for trade with the EU. 

The British Ports Association, which includes the UK's key ro/ro ports in its membership, also pointed to potential areas of improvement for the government's preparations. “Last month, we wrote to the chancellor urging him to spend newly-announced Brexit contingency funding on ensuring that government operations at the border are ready for any scenario, including any necessary physical and digital infrastructure, in addition to sufficient border staff," said Mark Simmonds, BPA's head of policy and external affairs. “Whatever happens, we hope the government will not expect ports to pick up the costs for new government checkpoints at short notice.”

The total allocation rises to $11 million when including a second tranche of funding for local resilience forums, partnerships made up of representatives from local public services. Kent, home to the port of Dover and the Eurotunnel, will receive about $3 million of the new funds. Dover is the UK's busiest cross-channel ro/ro port, and it handles an outsize share of the haulier traffic connecting continental EU shippers with their British counterparts.

Difficulties expected

Leaked documents published this week by the Sunday Times indicate that the UK government expects significant logistical difficulties in the event of a no-deal Brexit. As many as 85 percent of Europe-bound truckloads may not have the documents that would be required by customs officials on the French side of the channel, planners estimated. The resulting supply chain disruptions may create multi-day traffic snarls on both sides, potentially leading to challenges in procuring medicine and other critical supplies. Port delays could last for as long as three months, the planning assessment found.

The planning documents, code named "Operation Yellowhammer," indicated that the estimate was a "base case" scenario, as confirmed to media by officials involved in their preparation. However, Michael Gove, the Secretary of State for Environment, Food and Rural Affairs and the minister in charge of no-deal Brexit planning, has downplayed the document's projections. 

"'Operation Yellowhammer' is the name that the government has given to planning for absolutely the worst case, in the event of a no-deal Brexit," he said. "It's also important to recognize that this is an old document that since it was published and circulated, the government have taken significant additional steps to ensure that we are prepared to leave on October the 31st, deal or no deal." 

In an interview with the BBC, Gove said that he could not rule out delays at Britain's ports, but that the government is "seeking to ensure that we minimize the prospect of delays so that whatever bumps in the road we face we’re able to ride them out.”

2018 trade numbers steady

The UK's Department for Transport released its 2018 trade numbers on Thursday, and the results indicate that despite the long-running issues surrounding Brexit, volumes remained steady last year.

"Despite a temperamental global trading climate and the uncertainties created by Brexit, 2018 was a steady year for port operators. Overall port freight figures remain constant although there is plenty of port capacity in the dry bulks, project cargo and particularly in the container sectors, meaning shipping companies have plenty of choice. This means competition between ports, which drives efficiencies and innovation," said Phoebe Warneford-Thomson, Policy and Economic Analyst at the British Ports Association. 

Tonnage statistics for the fourth quarter showed an unusually high growth rate of six percent, which BPA said would be consistent with suggestions that UK manufacturers were "stockpiling" inventory ahead of expected trade disruptions in the first half of2019. 
  
The data also provides a breakdown by port traffic data. Overall figures are largely unchanged, but the BPA noted that last year's problems at the Port of Felixstowe, the UK’s busiest container port, created a 1.2 million tonne (16 percent) decline in the fourth quarter. Inbound units handled declined by 18 percent across the full year. Most of this traffic was switched by the deep-sea shipping lines to other UK ports, including Liverpool and London Gateway.